Washington | 91-1325671 |
(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) |
Large accelerated filer | x | Accelerated filer | ¨ |
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Title | Shares Outstanding as of July 25, 2012 |
Common Stock, par value $0.001 per share | 760.0 million |
Page | ||
PART I. FINANCIAL INFORMATION | ||
Item 1 | ||
Item 2 | ||
Item 3 | ||
Item 4 | ||
PART II. OTHER INFORMATION | ||
Item 1 | ||
Item 1A | ||
Item 2 | ||
Item 6 | ||
Index to Exhibits |
Item 1. | Financial Statements |
Quarter Ended | Three Quarters Ended | ||||||||||||||
Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | ||||||||||||
Net revenues: | |||||||||||||||
Company-operated stores | $ | 2,615.6 | $ | 2,417.3 | $ | 7,868.6 | $ | 7,162.1 | |||||||
Licensed stores | 308.2 | 248.7 | 905.1 | 740.8 | |||||||||||
CPG, foodservice and other | 379.8 | 266.2 | 1,161.7 | 765.8 | |||||||||||
Total net revenues | 3,303.6 | 2,932.2 | 9,935.4 | 8,668.7 | |||||||||||
Cost of sales including occupancy costs | 1,446.1 | 1,237.5 | 4,354.1 | 3,601.0 | |||||||||||
Store operating expenses | 976.0 | 917.1 | 2,928.3 | 2,672.2 | |||||||||||
Other operating expenses | 105.9 | 100.0 | 317.9 | 289.0 | |||||||||||
Depreciation and amortization expenses | 136.7 | 129.5 | 408.6 | 386.1 | |||||||||||
General and administrative expenses | 199.0 | 190.2 | 597.4 | 557.0 | |||||||||||
Total operating expenses | 2,863.7 | 2,574.3 | 8,606.3 | 7,505.3 | |||||||||||
Income from equity investees | 51.7 | 44.3 | 148.8 | 116.9 | |||||||||||
Operating income | 491.6 | 402.2 | 1,477.9 | 1,280.3 | |||||||||||
Interest income and other, net | 9.7 | 16.0 | 68.2 | 50.3 | |||||||||||
Interest expense | (8.9 | ) | (8.5 | ) | (26.2 | ) | (23.5 | ) | |||||||
Earnings before income taxes | 492.4 | 409.7 | 1,519.9 | 1,307.1 | |||||||||||
Income taxes | 159.1 | 129.9 | 494.2 | 417.2 | |||||||||||
Net earnings including noncontrolling interests | 333.3 | 279.8 | 1,025.7 | 889.9 | |||||||||||
Net earnings attributable to noncontrolling interests | 0.2 | 0.7 | 0.6 | 2.5 | |||||||||||
Net earnings attributable to Starbucks | $ | 333.1 | $ | 279.1 | $ | 1,025.1 | $ | 887.4 | |||||||
Earnings per share - basic | $ | 0.44 | $ | 0.37 | $ | 1.36 | $ | 1.19 | |||||||
Earnings per share - diluted | $ | 0.43 | $ | 0.36 | $ | 1.33 | $ | 1.15 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 758.9 | 750.5 | 753.8 | 748.8 | |||||||||||
Diluted | 776.8 | 771.9 | 772.9 | 770.1 | |||||||||||
Cash dividends declared per share | $ | 0.17 | $ | 0.13 | $ | 0.51 | $ | 0.39 |
Jul 1, 2012 | Oct 2, 2011 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 1,501.3 | $ | 1,148.1 | |||
Short-term investments | 996.3 | 902.6 | |||||
Accounts receivable, net | 433.0 | 386.5 | |||||
Inventories | 1,249.2 | 965.8 | |||||
Prepaid expenses and other current assets | 172.9 | 161.5 | |||||
Deferred income taxes, net | 216.9 | 230.4 | |||||
Total current assets | 4,569.6 | 3,794.9 | |||||
Long-term investments | 140.1 | 107.0 | |||||
Equity and cost investments | 414.3 | 372.3 | |||||
Property, plant and equipment, net | 2,444.2 | 2,355.0 | |||||
Other assets | 404.0 | 409.6 | |||||
Goodwill | 336.7 | 321.6 | |||||
TOTAL ASSETS | $ | 8,308.9 | $ | 7,360.4 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 402.2 | $ | 540.0 | |||
Accrued liabilities | 935.6 | 940.9 | |||||
Insurance reserves | 159.6 | 145.6 | |||||
Deferred revenue | 520.8 | 449.3 | |||||
Total current liabilities | 2,018.2 | 2,075.8 | |||||
Long-term debt | 549.6 | 549.5 | |||||
Other long-term liabilities | 353.1 | 347.8 | |||||
Total liabilities | 2,920.9 | 2,973.1 | |||||
Shareholders’ equity: | |||||||
Common stock ($0.001 par value) — authorized, 1,200.0 shares; issued and outstanding, 759.8 and 744.8 shares, respectively (includes 3.4 common stock units in both periods) | 0.8 | 0.7 | |||||
Additional paid-in capital | 450.9 | 40.5 | |||||
Retained earnings | 4,935.8 | 4,297.4 | |||||
Accumulated other comprehensive income | (2.5 | ) | 46.3 | ||||
Total shareholders’ equity | 5,385.0 | 4,384.9 | |||||
Noncontrolling interests | 3.0 | 2.4 | |||||
Total equity | 5,388.0 | 4,387.3 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 8,308.9 | $ | 7,360.4 |
Three Quarters Ended | |||||||
Jul 1, 2012 | Jul 3, 2011 | ||||||
OPERATING ACTIVITIES: | |||||||
Net earnings including noncontrolling interests | $ | 1,025.7 | $ | 889.9 | |||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | 427.7 | 408.2 | |||||
Deferred income taxes, net | 33.6 | 58.4 | |||||
Income earned from equity method investees, net of distributions | (37.7 | ) | (30.9 | ) | |||
Stock-based compensation | 114.8 | 108.2 | |||||
Other | 10.0 | 20.8 | |||||
Cash provided/(used) by changes in operating assets and liabilities: | |||||||
Inventories | (285.1 | ) | (308.5 | ) | |||
Accounts payable | (139.1 | ) | 55.5 | ||||
Accrued liabilities | (13.8 | ) | (82.3 | ) | |||
Deferred revenue | 71.8 | 73.5 | |||||
Prepaid expenses, other current assets and other assets | (81.0 | ) | (66.1 | ) | |||
Net cash provided by operating activities | 1,126.9 | 1,126.7 | |||||
INVESTING ACTIVITIES: | |||||||
Purchase of investments | (1,578.6 | ) | (169.7 | ) | |||
Maturities and calls of investments | 1,452.9 | 333.7 | |||||
Acquisitions, net of cash acquired | (29.7 | ) | — | ||||
Additions to property, plant and equipment, net | (516.5 | ) | (372.4 | ) | |||
Other | (12.3 | ) | (8.6 | ) | |||
Net cash used by investing activities | (684.2 | ) | (217.0 | ) | |||
FINANCING ACTIVITIES: | |||||||
Purchase of noncontrolling interest | — | (27.5 | ) | ||||
Proceeds from issuance of common stock | 155.2 | 187.4 | |||||
Excess tax benefit from exercise of stock options | 156.5 | 87.3 | |||||
Cash dividends paid | (384.0 | ) | (292.1 | ) | |||
Repurchase of common stock | (15.7 | ) | (321.9 | ) | |||
Other | (0.5 | ) | (0.6 | ) | |||
Net cash used by financing activities | (88.5 | ) | (367.4 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (1.0 | ) | 14.5 | ||||
Net increase in cash and cash equivalents | 353.2 | 556.8 | |||||
CASH AND CASH EQUIVALENTS: | |||||||
Beginning of period | 1,148.1 | 1,164.0 | |||||
End of period | $ | 1,501.3 | $ | 1,720.8 | |||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||
Cash paid during the period for: | |||||||
Interest, net of capitalized interest | $ | 17.2 | $ | 17.2 | |||
Income taxes | $ | 311.4 | $ | 287.4 |
Note 1: | Summary of Significant Accounting Policies |
Quarter Ended July 3, 2011 | Three Quarters Ended July 3, 2011 | ||||||||||||||||||||||
As Filed | Reclass | As Adjusted | As Filed | Reclass | As Adjusted | ||||||||||||||||||
Total net revenues | $ | 2,932.2 | $ | — | $ | 2,932.2 | $ | 8,668.7 | $ | — | $ | 8,668.7 | |||||||||||
Cost of sales including occupancy costs | 1,246.1 | (8.6 | ) | 1,237.5 | 3,626.9 | (25.9 | ) | 3,601.0 | |||||||||||||||
Store operating expenses | 934.5 | (17.4 | ) | 917.1 | 2,725.4 | (53.2 | ) | 2,672.2 | |||||||||||||||
Other operating expenses | 102.4 | (2.4 | ) | 100.0 | 296.2 | (7.2 | ) | 289.0 | |||||||||||||||
Depreciation and amortization expenses | 129.5 | — | 129.5 | 386.1 | — | 386.1 | |||||||||||||||||
General and administrative expenses | 161.8 | 28.4 | 190.2 | 470.7 | 86.3 | 557.0 | |||||||||||||||||
Total operating expenses | 2,574.3 | — | 2,574.3 | 7,505.3 | — | 7,505.3 | |||||||||||||||||
Income from equity investees | 44.3 | — | 44.3 | 116.9 | — | 116.9 | |||||||||||||||||
Operating income | $ | 402.2 | $ | — | $ | 402.2 | $ | 1,280.3 | $ | — | $ | 1,280.3 |
Note 2: | Acquisition |
Note 3: | Derivative Financial Instruments |
Foreign Currency | Coffee | ||||||||||||||
Quarter Ended: | Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | |||||||||||
Cash Flow Hedges: | |||||||||||||||
Gain/(Loss) recognized in earnings | $ | (2.8 | ) | $ | (4.7 | ) | $ | (1.3 | ) | $ | — | ||||
Gain/(Loss) recognized in OCI | $ | (1.9 | ) | $ | (5.4 | ) | $ | (20.6 | ) | $ | 0.1 | ||||
Net Investment Hedges: | |||||||||||||||
Gain/(Loss) recognized in earnings | $ | — | $ | — | |||||||||||
Gain/(Loss) recognized in OCI | $ | (5.4 | ) | $ | (5.2 | ) |
Foreign Currency | Coffee | ||||||||||||||
Three Quarters Ended: | Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | |||||||||||
Cash Flow Hedges: | |||||||||||||||
Gain/(Loss) recognized in earnings | $ | (8.6 | ) | $ | (10.8 | ) | $ | (1.3 | ) | $ | — | ||||
Gain/(Loss) recognized in OCI | $ | 1.0 | $ | (13.4 | ) | $ | (40.0 | ) | $ | 0.1 | |||||
Net Investment Hedges: | |||||||||||||||
Gain/(Loss) recognized in earnings | $ | — | $ | — | |||||||||||
Gain/(Loss) recognized in OCI | $ | 4.9 | $ | (5.1 | ) |
Foreign Currency | Dairy | Diesel Fuel | |||||||||||||||||||||
Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | ||||||||||||||||||
Gain/(Loss) recognized in earnings for the quarter ended | $ | 4.2 | $ | (0.3 | ) | $ | 1.2 | $ | 2.2 | $ | (0.9 | ) | $ | (0.2 | ) | ||||||||
Gain/(Loss) recognized in earnings for the three quarters ended | $ | — | $ | (3.9 | ) | $ | 2.0 | $ | 5.0 | $ | 0.7 | $ | 1.1 |
• | $384 million in foreign currency contracts |
• | $183 million in coffee contracts |
• | $41 million in dairy contracts |
• | $29 million in diesel fuel contracts |
Note 4: | Fair Value Measurements |
Fair Value Measurements at Reporting Date Using | |||||||||||||||
Balance at July 1, 2012 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets: | |||||||||||||||
Short-term investments: | |||||||||||||||
Available-for-sale securities | |||||||||||||||
Agency obligations | $ | 100.0 | $ | — | $ | 100.0 | $ | — | |||||||
Commercial paper | 193.9 | — | 193.9 | — | |||||||||||
Corporate debt securities | 80.8 | — | 80.8 | — | |||||||||||
Government treasury securities | 499.6 | 499.6 | — | — | |||||||||||
Certificates of deposit | 65.9 | — | 65.9 | — | |||||||||||
Total available-for-sale securities | 940.2 | 499.6 | 440.6 | — | |||||||||||
Trading securities | 56.1 | 56.1 | — | — | |||||||||||
Total short-term investments | 996.3 | 555.7 | 440.6 | — | |||||||||||
Long-term investments: | |||||||||||||||
Agency obligations | 4.0 | — | 4.0 | — | |||||||||||
Corporate debt securities | 73.6 | — | 73.6 | — | |||||||||||
State and local government obligations | 28.4 | — | — | 28.4 | |||||||||||
Certificates of deposit | 34.1 | — | 34.1 | — | |||||||||||
Total long-term investments | 140.1 | — | 111.7 | 28.4 | |||||||||||
Total | $ | 1,136.4 | $ | 555.7 | $ | 552.3 | $ | 28.4 | |||||||
Liabilities: | |||||||||||||||
Short-term derivatives: | |||||||||||||||
Foreign Currency | $ | 8.4 | $ | — | $ | 8.4 | $ | — | |||||||
Coffee | 25.7 | — | 25.7 | — | |||||||||||
Total short-term derivatives | 34.1 | — | 34.1 | — | |||||||||||
Long-term derivatives: | |||||||||||||||
Foreign Currency | 2.3 | — | 2.3 | — | |||||||||||
Coffee | 3.8 | — | 3.8 | — | |||||||||||
Total long-term derivatives | 6.1 | — | 6.1 | — | |||||||||||
Total | $ | 40.2 | $ | — | $ | 40.2 | $ | — |
Fair Value Measurements at Reporting Date Using | |||||||||||||||
Balance at October 2, 2011 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets: | |||||||||||||||
Short-term investments: | |||||||||||||||
Available-for-sale securities | |||||||||||||||
Agency obligations | $ | 20.0 | $ | — | $ | 20.0 | $ | — | |||||||
Commercial paper | 87.0 | — | 87.0 | — | |||||||||||
Corporate debt securities | 78.0 | — | 78.0 | — | |||||||||||
Government treasury securities | 606.0 | 606.0 | — | — | |||||||||||
Certificates of deposit | 64.0 | — | 64.0 | — | |||||||||||
Total available-for-sale securities | 855.0 | 606.0 | 249.0 | — | |||||||||||
Trading securities | 47.6 | 47.6 | — | — | |||||||||||
Total short-term investments | 902.6 | 653.6 | 249.0 | — | |||||||||||
Long-term investments: | |||||||||||||||
Corporate debt securities | 67.0 | — | 67.0 | — | |||||||||||
State and local government obligations | 28.0 | — | — | 28.0 | |||||||||||
Certificates of deposit | 12.0 | — | 12.0 | — | |||||||||||
Total long-term investments | 107.0 | — | 79.0 | 28.0 | |||||||||||
Total | $ | 1,009.6 | $ | 653.6 | $ | 328.0 | $ | 28.0 | |||||||
Liabilities: | |||||||||||||||
Short-term derivatives: | |||||||||||||||
Foreign Currency | $ | 20.1 | $ | — | $ | 20.1 | $ | — | |||||||
Coffee | 1.2 | — | 1.2 | — | |||||||||||
Total short-term derivatives | 21.3 | — | 21.3 | — | |||||||||||
Long-term derivatives: | |||||||||||||||
Foreign Currency | 9.9 | — | 9.9 | — | |||||||||||
Total long-term derivatives | 9.9 | — | 9.9 | — | |||||||||||
Total | $ | 31.2 | $ | — | $ | 31.2 | $ | — |
Quarter Ended July 1, 2012 | Three Quarters Ended July 1, 2012 | ||||||||||||||||||||||
Carrying Value before adjustment | Fair value adjustment | Carrying value after adjustment | Carrying Value before adjustment | Fair value adjustment | Carrying value after adjustment | ||||||||||||||||||
Property, plant and equipment (1) | $ | 1.1 | $ | (0.7 | ) | $ | 0.4 | $ | 4.4 | $ | (2.7 | ) | $ | 1.7 |
Quarter Ended July 3, 2011 | Three Quarters Ended July 3, 2011 | ||||||||||||||||||||||
Carrying Value before adjustment | Fair value adjustment | Carrying value after adjustment | Carrying Value before adjustment | Fair value adjustment | Carrying value after adjustment | ||||||||||||||||||
Property, plant and equipment (1) | $ | 1.7 | $ | (1.2 | ) | $ | 0.5 | $ | 2.8 | $ | (2.1 | ) | $ | 0.7 | |||||||||
Other assets (2) | $ | 1.6 | $ | (1.6 | ) | $ | — | $ | 22.1 | $ | (22.1 | ) | $ | — |
(1) | These assets primarily consist of leasehold improvements in underperforming stores. The fair value was determined using a discounted cash flow model based on expected future store revenues and operating costs, using internal projections. The resulting impairment charge was included in store operating expenses. |
(2) | The fair value was determined using a discounted cash flow model based on future expected revenues and operating costs, using internal projections. The resulting impairment charge was included in other operating expenses. |
Note 5: | Inventories (in millions) |
Jul 1, 2012 | Oct 2, 2011 | Jul 3, 2011 | |||||||||
Coffee: | |||||||||||
Unroasted | $ | 749.1 | $ | 431.3 | $ | 423.3 | |||||
Roasted | 225.8 | 246.5 | 190.5 | ||||||||
Other merchandise held for sale | 133.4 | 150.8 | 116.0 | ||||||||
Packaging and other supplies | 140.9 | 137.2 | 126.9 | ||||||||
Total | $ | 1,249.2 | $ | 965.8 | $ | 856.7 |
Note 6: | Supplemental Balance Sheet Information (in millions) |
Property, Plant and Equipment, net | Jul 1, 2012 | Oct 2, 2011 | |||||
Land | $ | 44.8 | $ | 44.8 | |||
Buildings | 222.6 | 218.5 | |||||
Leasehold improvements | 3,808.7 | 3,617.7 | |||||
Store equipment | 1,185.1 | 1,101.8 | |||||
Roasting equipment | 308.6 | 295.1 | |||||
Furniture, fixtures and other | 799.8 | 757.8 | |||||
Work in progress | 210.3 | 127.4 | |||||
Property, plant and equipment, gross | 6,579.9 | 6,163.1 | |||||
Less accumulated depreciation | (4,135.7 | ) | (3,808.1 | ) | |||
Property, plant and equipment, net | $ | 2,444.2 | $ | 2,355.0 |
Other Assets | Jul 1, 2012 | Oct 2, 2011 | |||||
Other intangible assets | $ | 117.8 | $ | 111.9 | |||
Other | 286.2 | 297.7 | |||||
Total other assets | $ | 404.0 | $ | 409.6 |
Accrued Liabilities | Jul 1, 2012 | Oct 2, 2011 | |||||
Accrued compensation and related costs | $ | 350.3 | $ | 364.4 | |||
Accrued occupancy costs | 125.7 | 148.3 | |||||
Accrued taxes | 99.7 | 109.2 | |||||
Accrued dividend payable | 129.1 | 126.6 | |||||
Other | 230.8 | 192.4 | |||||
Total accrued liabilities | $ | 935.6 | $ | 940.9 |
Other Long-Term Liabilities | Jul 1, 2012 | Oct 2, 2011 | |||||
Deferred rent | $ | 206.7 | $ | 215.2 | |||
Unrecognized tax benefits | 74.3 | 56.7 | |||||
Asset retirement obligations | 53.8 | 50.1 | |||||
Other | 18.3 | 25.8 | |||||
Total other long-term liabilities | $ | 353.1 | $ | 347.8 |
Americas | EMEA | China / Asia Pacific | Channel Development | Other | Total | ||||||||||||||||||
Balance at October 2, 2011 (1) | |||||||||||||||||||||||
Goodwill prior to impairment | $ | 162.9 | $ | 63.0 | $ | 74.8 | $ | 23.8 | $ | 5.7 | $ | 330.2 | |||||||||||
Accumulated impairment charges | (8.6 | ) | — | — | — | — | (8.6 | ) | |||||||||||||||
Goodwill | $ | 154.3 | $ | 63.0 | $ | 74.8 | $ | 23.8 | $ | 5.7 | $ | 321.6 | |||||||||||
Acquisitions | 11.8 | — | — | — | 5.8 | 17.6 | |||||||||||||||||
Purchase price adjustment of previous acquisitions | — | — | — | — | — | — | |||||||||||||||||
Impairment | — | — | — | — | — | — | |||||||||||||||||
Other (2) | 0.9 | (3.6 | ) | 0.2 | — | — | (2.5 | ) | |||||||||||||||
Balance at July 1, 2012 | |||||||||||||||||||||||
Goodwill prior to impairment | $ | 175.6 | $ | 59.4 | $ | 75.0 | $ | 23.8 | $ | 11.5 | $ | 345.3 | |||||||||||
Accumulated impairment charges | (8.6 | ) | — | — | — | — | (8.6 | ) | |||||||||||||||
Goodwill | $ | 167.0 | $ | 59.4 | $ | 75.0 | $ | 23.8 | $ | 11.5 | $ | 336.7 |
(1) | In conjunction with the change in reportable operating segments, we reclassified goodwill by segment as of October 2, 2011. |
(2) | Other is primarily comprised of changes in the goodwill balance as a result of foreign exchange fluctuations. |
Note 8: | Equity |
Three Quarters Ended | |||||||
Jul 1, 2012 | Jul 3, 2011 | ||||||
Beginning balance of total equity | $ | 4,387.3 | $ | 3,682.3 | |||
Net earnings including noncontrolling interest | 1,025.7 | 889.9 | |||||
Other comprehensive income / (loss) | (48.8 | ) | 40.3 | ||||
Comprehensive income | 976.9 | 930.2 | |||||
Stock-based compensation expense | 116.3 | 109.8 | |||||
Exercise of stock options | 295.6 | 255.4 | |||||
Sale of common stock | 14.3 | 14.1 | |||||
Repurchase of common stock | (15.7 | ) | (321.9 | ) | |||
Cash dividends declared | (386.7 | ) | (292.9 | ) | |||
Purchase of noncontrolling interest: | |||||||
Included in additional paid-in capital | — | (28.0 | ) | ||||
Included in noncontrolling interests | — | (7.5 | ) | ||||
Ending balance of total equity | $ | 5,388.0 | $ | 4,341.5 |
Jul 1, 2012 | Oct 2, 2011 | ||||||
Net unrealized gains / (losses) on available-for-sale securities | $ | (0.5 | ) | $ | (0.5 | ) | |
Net unrealized gains / (losses) on hedging instruments | (71.1 | ) | (45.3 | ) | |||
Translation adjustment | 69.1 | 92.1 | |||||
Accumulated other comprehensive income | $ | (2.5 | ) | $ | 46.3 |
Three Quarters Ended | |||||||
Jul 1, 2012 | Jul 3, 2011 | ||||||
Number of shares acquired | 0.4 | 9.2 | |||||
Average price per share of acquired shares | $ | 36.49 | $ | 35.12 | |||
Total cost of acquired shares | $ | 15.7 | $ | 321.9 |
Note 9: | Employee Stock Plans |
Quarter Ended | Three Quarters Ended | ||||||||||||||
Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | ||||||||||||
Options | $ | 11.2 | $ | 14.3 | $ | 35.4 | $ | 46.8 | |||||||
Restricted Stock Units (“RSUs”) | 27.6 | 22.7 | 79.4 | 61.4 | |||||||||||
Total stock-based compensation | $ | 38.8 | $ | 37.0 | $ | 114.8 | $ | 108.2 |
Quarter Ended | Three Quarters Ended | ||||||||||||||
Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | ||||||||||||
Estimated fair value per option granted | $ | 14.58 | $ | 10.28 | $ | 12.79 | $ | 9.53 | |||||||
Weighted average option grant price | $ | 54.93 | $ | 35.86 | $ | 44.07 | $ | 31.18 | |||||||
Weighted average price per option exercised | $ | 17.23 | $ | 15.79 | $ | 15.90 | $ | 13.98 | |||||||
Weighted average RSU grant price | $ | 55.38 | $ | 35.77 | $ | 43.93 | $ | 30.94 |
Stock Option | RSUs | ||||||
Options outstanding/Nonvested RSUs, October 2, 2011 | 45.3 | 8.3 | |||||
Granted | 3.3 | 4.0 | |||||
Options exercised/RSUs vested | (12.4 | ) | (4.0 | ) | |||
Forfeited/expired | (1.7 | ) | (0.8 | ) | |||
Options outstanding/Nonvested RSUs, July 1, 2012 | 34.5 | 7.5 | |||||
Total unrecognized stock-based compensation expense, net of estimated forfeitures, as of July 1, 2012 | $ | 44.1 | $ | 104.4 |
Note 10: | Earnings Per Share |
Quarter Ended | Three Quarters Ended | ||||||||||||||
July 1, 2012 | July 3, 2011 | July 1, 2012 | July 3, 2011 | ||||||||||||
Net earnings attributable to Starbucks | $ | 333.1 | $ | 279.1 | $ | 1,025.1 | $ | 887.4 | |||||||
Weighted average common shares and common stock units outstanding (for basic calculation) | 758.9 | 750.5 | 753.8 | 748.8 | |||||||||||
Dilutive effect of outstanding common stock options and RSUs | 17.9 | 21.4 | 19.1 | 21.3 | |||||||||||
Weighted average common and common equivalent shares outstanding (for diluted calculation) | 776.8 | 771.9 | 772.9 | 770.1 | |||||||||||
EPS — basic | $ | 0.44 | $ | 0.37 | $ | 1.36 | $ | 1.19 | |||||||
EPS — diluted | $ | 0.43 | $ | 0.36 | $ | 1.33 | $ | 1.15 |
Note 11: | Commitments and Contingencies |
Note 12: | Segment Reporting |
Americas | EMEA | China / Asia Pacific | Channel Development | Other | Total | ||||||||||||||||||
July 1, 2012 | |||||||||||||||||||||||
Total net revenues | $ | 2,471.2 | $ | 282.0 | $ | 181.8 | $ | 316.4 | $ | 52.2 | $ | 3,303.6 | |||||||||||
Depreciation and amortization expenses | 97.2 | 14.3 | 5.8 | 0.3 | 19.1 | 136.7 | |||||||||||||||||
Income (loss) from equity investees | — | — | 30.1 | 21.2 | 0.4 | 51.7 | |||||||||||||||||
Operating income/(loss) | 512.1 | 2.6 | 61.4 | 86.5 | (171.0 | ) | 491.6 | ||||||||||||||||
July 3, 2011 | |||||||||||||||||||||||
Total net revenues | $ | 2,275.9 | $ | 257.9 | $ | 138.6 | $ | 218.4 | $ | 41.4 | $ | 2,932.2 | |||||||||||
Depreciation and amortization expenses | 96.3 | 12.4 | 4.6 | 0.5 | 15.7 | 129.5 | |||||||||||||||||
Income (loss) from equity investees | — | 1.8 | 23.5 | 19.6 | (0.6 | ) | 44.3 | ||||||||||||||||
Operating income/(loss) | 450.9 | 4.9 | 44.9 | 69.3 | (167.8 | ) | 402.2 |
Americas | EMEA | China / Asia Pacific | Channel Development | Other | Total | ||||||||||||||||||
July 1, 2012 | |||||||||||||||||||||||
Total net revenues | $ | 7,424.4 | $ | 857.5 | $ | 523.3 | $ | 973.7 | $ | 156.5 | $ | 9,935.4 | |||||||||||
Depreciation and amortization expenses | 291.4 | 42.8 | 16.4 | 1.0 | 57.0 | 408.6 | |||||||||||||||||
Income (loss) from equity investees | 2.1 | 0.3 | 90.7 | 55.4 | 0.3 | 148.8 | |||||||||||||||||
Operating income/(loss) | 1,538.3 | 16.7 | 188.9 | 247.7 | (513.7 | ) | 1,477.9 | ||||||||||||||||
July 3, 2011 | |||||||||||||||||||||||
Total net revenues | $ | 6,768.8 | $ | 756.7 | $ | 391.1 | $ | 618.3 | $ | 133.8 | $ | 8,668.7 | |||||||||||
Depreciation and amortization expenses | 292.5 | 37.6 | 13.2 | 1.9 | 40.9 | 386.1 | |||||||||||||||||
Income (loss) from equity investees | 1.6 | 6.0 | 62.3 | 48.5 | (1.5 | ) | 116.9 | ||||||||||||||||
Operating income/(loss) | 1,398.1 | 37.8 | 134.6 | 207.5 | (497.7 | ) | 1,280.3 |
Quarter Ended | Three Quarters Ended | ||||||||||||||
July 1, 2012 | July 3, 2011 | July 1, 2012 | July 3, 2011 | ||||||||||||
Operating income | $ | 491.6 | $ | 402.2 | $ | 1,477.9 | $ | 1,280.3 | |||||||
Interest income and other, net | 9.7 | 16.0 | 68.2 | 50.3 | |||||||||||
Interest expense | (8.9 | ) | (8.5 | ) | (26.2 | ) | (23.5 | ) | |||||||
Earnings before income taxes | $ | 492.4 | $ | 409.7 | $ | 1,519.9 | $ | 1,307.1 |
Note 13: | Subsequent Event |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Quarter Ended Jul 1, 2012 | Three Quarters Ended Jul 1, 2012 | ||||||||||||||||
Sales Growth | Change in Transactions | Change in Ticket | Sales Growth | Change in Transactions | Change in Ticket | ||||||||||||
Consolidated | 6 | % | 5 | % | 2 | % | 8 | % | 6 | % | 1 | % | |||||
Americas | 7 | % | 5 | % | 2 | % | 8 | % | 6 | % | 1 | % | |||||
EMEA | — | % | — | % | — | % | 1 | % | — | % | — | % | |||||
China / Asia Pacific | 12 | % | 8 | % | 4 | % | 17 | % | 12 | % | 4 | % |
Quarter Ended | Three Quarters Ended | ||||||||||||||||||||
Jul 1, 2012 | Jul 3, 2011 | % Change | Jul 1, 2012 | Jul 3, 2011 | % Change | ||||||||||||||||
Company-operated stores | $ | 2,615.6 | $ | 2,417.3 | 8.2 | % | $ | 7,868.6 | $ | 7,162.1 | 9.9 | % | |||||||||
Licensed stores | 308.2 | 248.7 | 23.9 | 905.1 | 740.8 | 22.2 | |||||||||||||||
CPG, foodservice and other | 379.8 | 266.2 | 42.7 | 1,161.7 | 765.8 | 51.7 | |||||||||||||||
Total net revenues | $ | 3,303.6 | $ | 2,932.2 | 12.7 | % | $ | 9,935.4 | $ | 8,668.7 | 14.6 | % |
Quarter Ended | Three Quarters Ended | ||||||||||||||||||||||||||
Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | ||||||||||||||||||||
% of Total | % of Total | ||||||||||||||||||||||||||
Net Revenues | Net Revenues | ||||||||||||||||||||||||||
Cost of sales including occupancy costs | $ | 1,446.1 | $ | 1,237.5 | 43.8 | % | 42.2 | % | $ | 4,354.1 | $ | 3,601.0 | 43.8 | % | 41.5 | % | |||||||||||
Store operating expenses | 976.0 | 917.1 | 29.5 | 31.3 | 2,928.3 | 2,672.2 | 29.5 | 30.8 | |||||||||||||||||||
Other operating expenses | 105.9 | 100.0 | 3.2 | 3.4 | 317.9 | 289.0 | 3.2 | 3.3 | |||||||||||||||||||
Depreciation and amortization expenses | 136.7 | 129.5 | 4.1 | 4.4 | 408.6 | 386.1 | 4.1 | 4.5 | |||||||||||||||||||
General and administrative expenses | 199.0 | 190.2 | 6.0 | 6.5 | 597.4 | 557.0 | 6.0 | 6.4 | |||||||||||||||||||
Total operating expenses | 2,863.7 | 2,574.3 | 86.7 | 87.8 | 8,606.3 | 7,505.3 | 86.6 | 86.6 | |||||||||||||||||||
Income from equity investees | 51.7 | 44.3 | 1.6 | 1.5 | 148.8 | 116.9 | 1.5 | 1.3 | |||||||||||||||||||
Operating income | $ | 491.6 | $ | 402.2 | 14.9 | % | 13.7 | % | $ | 1,477.9 | $ | 1,280.3 | 14.9 | % | 14.8 | % | |||||||||||
Store operating expenses as a % of related revenues | 37.3 | % | 37.9 | % | 37.2 | % | 37.3 | % |
Quarter Ended | Three Quarters Ended | ||||||||||||||||||||||||||
Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | ||||||||||||||||||||
% of Total | % of Total | ||||||||||||||||||||||||||
Net Revenues | Net Revenues | ||||||||||||||||||||||||||
Operating income | $ | 491.6 | $ | 402.2 | 14.9 | % | 13.7 | % | $ | 1,477.9 | $ | 1,280.3 | 14.9 | % | 14.8 | % | |||||||||||
Interest income and other, net | 9.7 | 16.0 | 0.3 | 0.5 | 68.2 | 50.3 | 0.7 | 0.6 | |||||||||||||||||||
Interest expense | (8.9 | ) | (8.5 | ) | (0.3 | ) | (0.3 | ) | (26.2 | ) | (23.5 | ) | (0.3 | ) | (0.3 | ) | |||||||||||
Earnings before income taxes | 492.4 | 409.7 | 14.9 | 14.0 | 1,519.9 | 1,307.1 | 15.3 | 15.1 | |||||||||||||||||||
Income taxes | 159.1 | 129.9 | 4.8 | 4.4 | 494.2 | 417.2 | 5.0 | 4.8 | |||||||||||||||||||
Net earnings including noncontrolling interests | 333.3 | 279.8 | 10.1 | 9.5 | 1,025.7 | 889.9 | 10.3 | 10.3 | |||||||||||||||||||
Net earnings (loss) attributable to noncontrolling interest | 0.2 | 0.7 | — | — | 0.6 | 2.5 | — | — | |||||||||||||||||||
Net earnings attributable to Starbucks | $ | 333.1 | $ | 279.1 | 10.1 | % | 9.5 | % | $ | 1,025.1 | $ | 887.4 | 10.3 | % | 10.2 | % | |||||||||||
Effective tax rate including noncontrolling interest | 32.3 | % | 31.7 | % | 32.5 | % | 31.9 | % |
Quarter Ended | Three Quarters Ended | ||||||||||||||||||||||||||
Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | ||||||||||||||||||||
% of Americas Net Revenues | % of Americas Net Revenues | ||||||||||||||||||||||||||
Total net revenues | $ | 2,471.2 | $ | 2,275.9 | $ | 7,424.4 | $ | 6,768.8 | |||||||||||||||||||
Cost of sales including occupancy costs | 965.1 | 880.8 | 39.1 | % | 38.7 | % | 2,913.4 | 2,602.3 | 39.2 | % | 38.4 | % | |||||||||||||||
Store operating expenses | 858.1 | 813.3 | 34.7 | 35.7 | 2,570.3 | 2,378.9 | 34.6 | 35.1 | |||||||||||||||||||
Other operating expenses | 20.2 | 18.9 | 0.8 | 0.8 | 59.4 | 55.5 | 0.8 | 0.8 | |||||||||||||||||||
Depreciation and amortization expenses | 97.2 | 96.3 | 3.9 | 4.2 | 291.4 | 292.5 | 3.9 | 4.3 | |||||||||||||||||||
General and administrative expenses | 18.5 | 15.7 | 0.7 | 0.7 | 53.7 | 43.1 | 0.7 | 0.6 | |||||||||||||||||||
Total operating expenses | 1,959.1 | 1,825.0 | 79.3 | 80.2 | 5,888.2 | 5,372.3 | 79.3 | 79.4 | |||||||||||||||||||
Income from equity investees | — | — | — | — | 2.1 | 1.6 | — | — | |||||||||||||||||||
Operating income | $ | 512.1 | $ | 450.9 | 20.7 | % | 19.8 | % | $ | 1,538.3 | $ | 1,398.1 | 20.7 | % | 20.7 | % | |||||||||||
Store operating expenses as a % of related revenues | 38.0 | % | 38.7 | % | 37.9 | % | 38.0 | % |
Quarter Ended | Three Quarters Ended | ||||||||||||||||||||||||||
Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | ||||||||||||||||||||
% of EMEA Net Revenues | % of EMEA Net Revenues | ||||||||||||||||||||||||||
Total net revenues | $ | 282.0 | $ | 257.9 | $ | 857.5 | $ | 756.7 | |||||||||||||||||||
Cost of sales including occupancy costs | 149.8 | 133.1 | 53.1 | % | 51.6 | % | 444.2 | 377.4 | 51.8 | % | 49.9 | % | |||||||||||||||
Store operating expenses | 88.2 | 82.1 | 31.3 | 31.8 | 274.0 | 236.3 | 32.0 | 31.2 | |||||||||||||||||||
Other operating expenses | 8.4 | 9.0 | 3.0 | 3.5 | 26.0 | 24.9 | 3.0 | 3.3 | |||||||||||||||||||
Depreciation and amortization expenses | 14.3 | 12.4 | 5.1 | 4.8 | 42.8 | 37.6 | 5.0 | 5.0 | |||||||||||||||||||
General and administrative expenses | 18.7 | 18.2 | 6.6 | 7.1 | 54.1 | 48.7 | 6.3 | 6.4 | |||||||||||||||||||
Total operating expenses | 279.4 | 254.8 | 99.1 | 98.8 | 841.1 | 724.9 | 98.1 | 95.8 | |||||||||||||||||||
Income from equity investees | — | 1.8 | — | 0.7 | 0.3 | 6.0 | — | 0.8 | |||||||||||||||||||
Operating income | $ | 2.6 | $ | 4.9 | 0.9 | % | 1.9 | % | $ | 16.7 | $ | 37.8 | 1.9 | % | 5.0 | % | |||||||||||
Store operating expenses as a % of related revenues | 37.2 | % | 37.0 | % | 37.3 | % | 36.1 | % |
Quarter Ended | Three Quarters Ended | ||||||||||||||||||||||||||
Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | ||||||||||||||||||||
% of CAP Net Revenues | % of CAP Net Revenues | ||||||||||||||||||||||||||
Total net revenues | $ | 181.8 | $ | 138.6 | $ | 523.3 | $ | 391.1 | |||||||||||||||||||
Cost of sales including occupancy costs | 91.5 | 69.7 | 50.3 | % | 50.3 | % | 262.7 | 198.3 | 50.2 | % | 50.7 | % | |||||||||||||||
Store operating expenses | 29.7 | 21.7 | 16.3 | 15.7 | 84.0 | 57.0 | 16.1 | 14.6 | |||||||||||||||||||
Other operating expenses | 11.3 | 10.3 | 6.2 | 7.4 | 32.4 | 26.2 | 6.2 | 6.7 | |||||||||||||||||||
Depreciation and amortization expenses | 5.8 | 4.6 | 3.2 | 3.3 | 16.4 | 13.2 | 3.1 | 3.4 | |||||||||||||||||||
General and administrative expenses | 12.2 | 10.9 | 6.7 | 7.9 | 29.6 | 24.1 | 5.7 | 6.2 | |||||||||||||||||||
Total operating expenses | 150.5 | 117.2 | 82.8 | 84.6 | 425.1 | 318.8 | 81.2 | 81.5 | |||||||||||||||||||
Income from equity investees | 30.1 | 23.5 | 16.6 | 17.0 | 90.7 | 62.3 | 17.3 | 15.9 | |||||||||||||||||||
Operating income | $ | 61.4 | $ | 44.9 | 33.8 | % | 32.4 | % | $ | 188.9 | $ | 134.6 | 36.1 | % | 34.4 | % | |||||||||||
Store operating expenses as a % of related revenues | 24.4 | % | 23.3 | % | 24.0 | % | 22.5 | % |
Quarter Ended | Three Quarters Ended | ||||||||||||||||||||||||||
Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | ||||||||||||||||||||
% of Channel Development Net Revenues | % of Channel Development Net Revenues | ||||||||||||||||||||||||||
Total net revenues | $ | 316.4 | $ | 218.4 | $ | 973.7 | $ | 618.3 | |||||||||||||||||||
Cost of sales | 201.1 | 128.0 | 63.6 | % | 58.6 | % | 626.5 | 347.9 | 64.3 | % | 56.3 | % | |||||||||||||||
Other operating expenses | 47.8 | 38.2 | 15.1 | 17.5 | 147.3 | 104.8 | 15.1 | 16.9 | |||||||||||||||||||
Depreciation and amortization expenses | 0.3 | 0.5 | 0.1 | 0.2 | 1.0 | 1.9 | 0.1 | 0.3 | |||||||||||||||||||
General and administrative expenses | 1.9 | 2.0 | 0.6 | 0.9 | 6.6 | 4.7 | 0.7 | 0.8 | |||||||||||||||||||
Total operating expenses | 251.1 | 168.7 | 79.4 | 77.2 | 781.4 | 459.3 | 80.3 | 74.3 | |||||||||||||||||||
Income from equity investees | 21.2 | 19.6 | 6.7 | 9.0 | 55.4 | 48.5 | 5.7 | 7.8 | |||||||||||||||||||
Operating income | $ | 86.5 | $ | 69.3 | 27.3 | % | 31.7 | % | $ | 247.7 | $ | 207.5 | 25.4 | % | 33.6 | % |
Quarter Ended | Three Quarters Ended | ||||||||||||||||||||
Jul 1, 2012 | Jul 3, 2011 | % Change | Jul 1, 2012 | Jul 3, 2011 | % Change | ||||||||||||||||
Total net revenues | $ | 52.2 | $ | 41.4 | 26.1 | % | $ | 156.5 | $ | 133.8 | 17.0 | % | |||||||||
Cost of sales | 38.6 | 25.9 | 49.0 | 107.3 | 75.1 | 42.9 | |||||||||||||||
Other operating expenses | 18.2 | 23.6 | (22.9 | ) | 52.8 | 77.6 | (32.0 | ) | |||||||||||||
Depreciation and amortization expenses | 19.1 | 15.7 | 21.7 | 57.0 | 40.9 | 39.4 | |||||||||||||||
General and administrative expenses | 147.7 | 143.4 | 3.0 | 453.4 | 436.4 | 3.9 | |||||||||||||||
Total operating expenses | 223.6 | 208.6 | 7.2 | 670.5 | 630.0 | 6.4 | |||||||||||||||
Income/(loss) from equity investees | 0.4 | (0.6 | ) | nm | 0.3 | (1.5 | ) | nm | |||||||||||||
Operating loss | $ | (171.0 | ) | $ | (167.8 | ) | 1.9 | % | $ | (513.7 | ) | $ | (497.7 | ) | 3.2 | % |
Net stores opened/(closed) during the period | |||||||||||||||||
Quarter Ended | Three Quarters Ended | Stores open as of | |||||||||||||||
Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | Jul 1, 2012 | Jul 3, 2011 | ||||||||||||
Americas | |||||||||||||||||
Company-operated stores | 47 | — | 83 | 4 | 7,706 | 7,584 | |||||||||||
Licensed stores | 36 | 52 | 171 | (105 | ) | 4,947 | 4,939 | ||||||||||
83 | 52 | 254 | (101 | ) | 12,653 | 12,523 | |||||||||||
EMEA | |||||||||||||||||
Company-operated stores (1) | 2 | 15 | 7 | 21 | 903 | 891 | |||||||||||
Licensed stores (1) | 34 | 21 | 71 | 55 | 933 | 839 | |||||||||||
36 | 36 | 78 | 76 | 1,836 | 1,730 | ||||||||||||
China / Asia Pacific | |||||||||||||||||
Company-operated stores | 32 | 14 | 95 | 52 | 607 | 491 | |||||||||||
Licensed stores | 80 | 53 | 221 | 133 | 2,555 | 2,274 | |||||||||||
112 | 67 | 316 | 185 | 3,162 | 2,765 | ||||||||||||
Total | 231 | 155 | 648 | 160 | 17,651 | 17,018 |
(1) | EMEA store data has been adjusted for the acquisition of store locations in Austria and Switzerland in the fourth quarter of fiscal 2011, by reclassifying historical information from Licensed stores to Company-operated stores. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 6. | Exhibits |
Incorporated by Reference | |||||||||||||||||
Exhibit No. | Exhibit Description | Form | File No. | Date of First Filing | Exhibit | Filed Herewith | |||||||||||
31.1 | Certification of Principal Executive Officer Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes — Oxley Act of 2002 | — | — | — | — | X | |||||||||||
31.2 | Certification of Principal Financial Officer Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes — Oxley Act of 2002 | — | — | — | — | X | |||||||||||
32* | Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to 18 USC. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | — | — | — | — | — | |||||||||||
101 | The following financial statements from the Company’s 10-Q for the fiscal quarter ended July 1, 2012, formatted in XBRL: (i) Condensed Consolidated Statements of Earnings, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Cash Flows and (iv) Notes to Condensed Consolidated Financial Statements | — | — | — | — | X |
STARBUCKS CORPORATION | |||
By: | /s/ Troy Alstead | ||
Troy Alstead | |||
chief financial officer | |||
and chief administrative officer | |||
Signing on behalf of the registrant and as principal financial officer |
1. | I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2012 of Starbucks Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Howard Schultz | |
Howard Schultz | |
chairman, president and chief executive officer |
1. | I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2012 of Starbucks Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Troy Alstead | |
Troy Alstead | |
chief financial officer | |
and chief administrative officer |
(1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Starbucks. |
/s/ Howard Schultz | |
Howard Schultz | |
chairman, president and chief executive officer |
/s/ Troy Alstead | |
Troy Alstead | |
chief financial officer | |
and chief administrative officer |
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Supplemental Balance Sheet Information (Schedule Of Accrued Liabilities) (Details) (USD $)
In Millions, unless otherwise specified |
Jul. 01, 2012
|
Oct. 02, 2011
|
---|---|---|
Balance Sheet Related Disclosures [Abstract] | ||
Accrued compensation and related costs | $ 350.3 | $ 364.4 |
Accrued occupancy costs | 125.7 | 148.3 |
Accrued taxes | 99.7 | 109.2 |
Accrued dividend payable | 129.1 | 126.6 |
Other | 230.8 | 192.4 |
Total accrued liabilities | $ 935.6 | $ 940.9 |
Employee Stock Plans (Value Of Awards Granted And Exercised During The Period) (Details) (USD $)
|
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2012
|
Jul. 03, 2011
|
Jul. 01, 2012
|
Jul. 03, 2011
|
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Estimated fair value per option granted | $ 14.58 | $ 10.28 | $ 12.79 | $ 9.53 |
Weighted average option grant price | $ 54.93 | $ 35.86 | $ 44.07 | $ 31.18 |
Weighted average price per option exercised | $ 17.23 | $ 15.79 | $ 15.90 | $ 13.98 |
Weighted average RSU grant price | $ 55.38 | $ 35.77 | $ 43.93 | $ 30.94 |
Segment Reporting (Reconciles The Total Of Operating Income To Consolidated Earnings Before Income Taxes) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2012
|
Jul. 03, 2011
|
Jul. 01, 2012
|
Jul. 03, 2011
|
|
Segment Reporting [Abstract] | ||||
Operating income | $ 491.6 | $ 402.2 | $ 1,477.9 | $ 1,280.3 |
Interest income and other, net | 9.7 | 16.0 | 68.2 | 50.3 |
Interest expense | (8.9) | (8.5) | (26.2) | (23.5) |
Earnings before income taxes | $ 492.4 | $ 409.7 | $ 1,519.9 | $ 1,307.1 |
Employee Stock Plans (Narrative) (Details)
In Millions, unless otherwise specified |
Jul. 01, 2012
|
---|---|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Common stock available for issuance pursuant to future equity-based compensation awards and ESPP | 32.4 |
Fair Value Measurements (Narrative) (Details) (6.25% Senior Notes [Member], USD $)
In Millions, unless otherwise specified |
Jul. 01, 2012
|
Oct. 02, 2011
|
---|---|---|
6.25% Senior Notes [Member]
|
||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Face amount | $ 550 | |
Interest rate | 6.25% | |
Fair value | $ 667 | $ 648 |
Equity (Tables)
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2012
|
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components Of Total Equity | Changes in total equity (in millions):
|
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Components Of Accumulated Other Comprehensive Income, Net Of Tax | Components of accumulated other comprehensive income, net of tax (in millions):
|
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Share Repurchase Activity | Share repurchase activity (in millions, except for average price data):
|
Earnings Per Share (Narrative) (Details) (Stock Options [Member])
In Millions, unless otherwise specified |
9 Months Ended | |
---|---|---|
Jul. 01, 2012
|
Jul. 03, 2011
|
|
Stock Options [Member]
|
||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Out-of-the-money options | 0 | 2.0 |
Equity (Narrative) (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified |
9 Months Ended | |
---|---|---|
Jul. 01, 2012
|
Oct. 02, 2011
|
|
Equity [Abstract] | ||
Authorized shares of common stock | 1,200.0 | 1,200.0 |
Par value of common stock | $ 0.001 | $ 0.001 |
Authorized shares of preferred stock | 7.5 | |
Outstanding shares of preferred stock | 0 | |
Shares available for repurchase | 24.0 | |
Cash dividend to shareholders | $ 0.17 | |
Dividends payable, payment date | Aug. 24, 2012 | |
Dividends payable, record date | Aug. 08, 2012 |
Supplemental Balance Sheet Information (Property, Plant And Equipment, Net) (Details) (USD $)
In Millions, unless otherwise specified |
Jul. 01, 2012
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Oct. 02, 2011
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Balance Sheet Related Disclosures [Abstract] | ||
Land | $ 44.8 | $ 44.8 |
Buildings | 222.6 | 218.5 |
Leasehold improvements | 3,808.7 | 3,617.7 |
Store equipment | 1,185.1 | 1,101.8 |
Roasting equipment | 308.6 | 295.1 |
Furniture, fixtures and other | 799.8 | 757.8 |
Work in progress | 210.3 | 127.4 |
Property, plant and equipment, gross | 6,579.9 | 6,163.1 |
Less accumulated depreciation | (4,135.7) | (3,808.1) |
Property, plant and equipment, net | $ 2,444.2 | $ 2,355.0 |
Commitments And Contingencies (Details) (USD $)
In Millions, unless otherwise specified |
0 Months Ended | 3 Months Ended | |
---|---|---|---|
Nov. 29, 2010
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Jul. 01, 2012
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Aug. 31, 2010
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Gain Loss Contingencies [Line Items] | |||
Potential additional premium to be paid to the affiliate over the fair value of agreement in case of termination | 35.00% | ||
Value of rejected offer | $ 750.0 | ||
Asserted premium payment percentage damages sought | 35.00% | ||
Interest penalty damages sought | 9.00% | ||
Starbucks Claims [Member]
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Gain Loss Contingencies [Line Items] | |||
Counter claim damages sought value | 62.9 | ||
Kraft Claims [Member]
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Gain Loss Contingencies [Line Items] | |||
Damages sought | 1,900.0 | ||
Loss contingency damages sought value | 2,900.0 |
Employee Stock Plans (Stock-Based Compensation Expense Recognized In Consolidated Statement Of Earnings) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2012
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Jul. 03, 2011
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Jul. 01, 2012
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Jul. 03, 2011
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Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 38.8 | $ 37.0 | $ 114.8 | $ 108.2 |
Options [Member]
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Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 11.2 | 14.3 | 35.4 | 46.8 |
Restricted Stock Units (RSUs) [Member]
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||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 27.6 | $ 22.7 | $ 79.4 | $ 61.4 |
Fair Value Measurements
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2012
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis (in millions):
Short-term and long-term derivatives are included in other accrued liabilities, and other long-term liabilities, respectively. Gross unrealized holding gains and losses were not material as of July 1, 2012 and October 2, 2011. Changes in Level 3 Instruments Measured at Fair Value on a Recurring Basis Financial instruments measured using Level 3 inputs described above are comprised entirely of our auction rate securities (“ARS”). Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Assets and liabilities recognized or disclosed at fair value in the financial statements on a nonrecurring basis include items such as property, plant and equipment, goodwill and other intangible assets, equity and cost method investments, and other assets. These assets are measured at fair value if determined to be impaired. During the quarter and three quarters ended July 1, 2012 and July 3, 2011, we recognized fair market value adjustments with a charge to earnings for these assets as follows (in millions):
Fair Value of Other Financial Instruments The estimated fair value of the $550 million of 6.25% Senior Notes based on the quoted market price (Level 2) was approximately $667 million and $648 million as of July 1, 2012 and October 2, 2011, respectively. |